London stocks surge in early trade

Property stocks have spiked in London amid a broad European market uplift.

London’s sharemarket has surged in early trade, boosted by improved oil prices and a positive Wall Street lead despite ongoing uncertainties around the effects of Britain’s decision to exit the European Union.

In early deals, the benchmark FTSE 100 index was tracking 1.53 per cent higher, at 6562.37 points, while the broader FTSE 250 index jumped 1.42 per cent to 15891.37 points.

Sentiment was helped by mining and energy companies, as Brent crude tracked 0.5 per cent higher at $49.02 a barrel, with traders anticipating a reduction in US crude stocks.

But property groups led the gains, as Brexit concerns moderated somewhat and bargain hunters stepped in.

Property stocks made up three of the top five performers in early deals, with commercial property group Land Securities spiking 6.56 per cent to £9.83, home builder Taylor Wimpey putting on 5.5 per cent to £12.23 and real estate investment trusts British Land surging 5.33 per cent to £5.74.

The sector’s rise was mirrored across Europe, even as more fund managers stopped investors in UK property from pulling out their money.

Meanwhile, The Stoxx Europe 600 rose 1.2 per cent in early trade.

France’s CAC 40 brightened 1.45 per cent, while the German DAX lifted 1.01 per cent and Italy’s benchmark FTSE MIB index gained 1.03 per cent.

The optimism came despite ongoing warnings around the economic uncertainties of Brexit, including its potential impacts on the British property sector.

London-focused property firm Great Portland Estates warned on Thursday that the capital’s economy would suffer a “negative impact” from Brexit.

“It is likely that the uncertainty created by the EU referendum result will have a negative impact on economic growth in London,” said chief executive Toby Courtauld, whose company manages a property portfolio worth £3.7 billion ($4.8 billion, 4.3 billion euros) in the capital.

“In the near-term, we expect confidence to reduce and some business investment decisions to be deferred whilst negotiations to establish our trading arrangements with the EU are undertaken.” He added in a trading update that “we can expect London’s commercial property markets to weaken during this period of uncertainty” -- during which Portland would face “reduced rental growth prospects”.

Britain’s real estate market has emerged as one of the hardest hit sectors from the country’s shock June 23 referendum decision to leave the 28-nation European Union.

Three more British commercial property funds suspended trading on Wednesday on a wave of redemptions triggered by the Brexit vote, meaning six funds have now halted trade with assets totalling around £15 billion.

Offshore, Wall Street had reversed early losses to close higher on Wednesday after a reading on US service sector activity suggested the country’s economy remains on solid ground. Minutes from the Federal Reserve’s June meeting showed Wednesday that officials were divided on the path for rates ahead of their July policy meeting, as widely expected.

— with Dow Jones newswires